Why did I write this book?
In 1999 I bought my first home with my new wife from a large national homebuilder. Actually, my wife bought it. I didn’t have a good enough credit score. I didn’t have a BAD score, I had NO score. I grew up in northern Wisconsin where I was taught that if you didn’t have the money in your pocket, you couldn’t afford it. Somehow I made it through college without being seduced into a credit card and accumulated zero debt by graduation. When I applied for the mortgage, I remember asking (or exclaiming) “Do you mean, because I have always been able to save up money to buy things instead of borrowing money when I couldn’t afford something I want, that now when I need to borrow money I am unqualifiable?!? Because I have NO DEBT, I can’t prove that I can manage debt?!?”
And his answer: “Exactly.”
We bought a nice three bedroom, two and one-half bath tri-level home across the street from an elementary school. I naively remember thinking to myself, “We plan on having two kids, so there will be a bedroom for each of the kids and the master for us. The kids will go to school right across the street, and we will live happily ever after. After all, I lived in one house all through my youth until I graduated from high school, why wouldn’t my kids?” That thinking dictated my decision for a 30-year fixed mortgage.
Our “Loan Officer” was a representative of the builder, and treated the mortgage as the necessary means to the sale, offering no advice or counsel. His only question to us as first time homebuyers was, “Do you want an adjustable mortgage or a fixed rate?” Knowing nothing of either, the thought of an adjustable rate did not seem good, so we opted for a fixed. Sadly, in the five years that we lived in that house we had three different mortgages, rolling the costs into the loan each time and paying points to boot, needlessly losing over $12,000 on our mortgage of $150,000. My estimates show a loss of nearly 8% of the total mortgage on poor decisions due to a lack of information.
Just as you do, I work hard for the money I earn. The last thing I ever want to do is squander it away due to incompetence. I wrote this book after years of counseling homebuyers and homeowners on liability management. This book is reflective of my views and should be read to stimulate your thoughts and opinions. Challenge what you read here, create your own views. My goal is that you will be able to make more knowledgeable decisions with your finances as a result of what you learn in the pages to follow.
As Benjamin Disraeli stated in the early 1800’s:
“As a general rule the most successful man in life is the man who has the best information.”
Enjoy The Borrower’s Bible.